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Chinese government fines Alibaba for deceptive pricing by marketplace sellers

April 20, 2015 12:23 PM

Chinese e-commerce giant Alibaba Group Holding Ltd. has disclosed that a Chinese government agency has fined the e-commerce giant for deceptive pricing practices of some sellers on Alibaba’s online marketplaces.

The Office of Price Administration in Zhejiang Province, where Alibaba’s headquarter is located, fined Alibaba 800,000 yuan ($192,000) because the agency found some merchants on Alibaba’s retail sites raised the prices of products and then offered discounts off the higher prices during Singles’ Day in 2013 and 2014, Alibaba says.

Singles’ Day, which is Nov. 11, has become a big day for online sales in China. Consumers purchased $9.3 billion worth of goods on Alibaba’s e-retail sites during the annual 24-hour sales event on Singles’ Day in 2014, according to Alibaba. Alibaba did not provide details on the number of merchants who improperly priced their products or the value of the transactions involved.

Although merchants set their own product prices, Alibaba says it will strengthen its oversight of product pricing and instruct sellers to obey pricing rules in the future.

In terms of transaction volume, Alibaba manages the largest online marketplaces in the world. Nine million merchants sell 1 billion items at any time on Taobao.com and Tmall.com, and 200 million shoppers visit Alibaba’s marketplaces every day, according to Alibaba.

The vast scale of Alibaba’s marketplaces has the company struggling to manage the activities of the 9 million merchants on its platform. Alibaba came under fire from the government recently about merchants selling counterfeiting products and conceded that some sellers create fake orders in order to move up in rankings on its shopping sites.